Similar to any business, your foundation should have a succession plan that establishes key roles and identifies future leaders. A comprehensive plan can help steer your organization through moments of transition—whether expected or unexpected—to ensure continuity.
Maintaining Stability During Times of Transition
At some point, every foundation and its board will face a leadership transition of its executive director, CEO, or board chair. A detailed succession plan is about more than just having someone ready to step into these roles. It serves as a detailed roadmap to help maintain the continuity of your organization’s mission, the stability of effective leadership, and a smooth and thoughtful transition. Through careful planning, your foundation can also strengthen governance and maintain trust with grantees.
Ideally, an executive transition allows time for predeparture planning, a departure announcement, progress communications, and new executive introduction. Yet foundations understand that leadership change is unavoidable, even natural, and sometimes departures can occur without much warning. A well-thought-out succession plan can account for instances when an unanticipated change occurs, helping your foundation manage through this change while staying true to its core mission and avoiding making critical decisions in a panic.
Succession planning has become more important than ever due to several factors, including:
- A lack of funding
- Difficulty finding resources
- Current nonprofit CEOs leaving their positions at higher rates than in the past*
Key Components of a Succession Plan
At a minimum, a succession plan should:
- Name key positions and potential successors beyond the CEO or executive director.
- Offer opportunities for successors to develop skills, strengthening the leadership pipeline.
- Identify a clear process for transitioning leadership and how it will be communicated throughout the foundation and to grantees and other stakeholders.
- Document processes and strategy to avoid disruptions for funding priorities and campaigns.
- Incorporate steps to address unexpected events or contingencies, perhaps through examples of hypothetical scenarios.
- Include a timeline for transition
The Board’s Role
With ultimate responsibility for overseeing the executive director or CEO, a foundation’s board is typically involved in the succession planning process. Your board should view succession planning as a risk management strategy that can help maintain equilibrium. The goal in any succession plan is seamlessness—different leaders may offer unique perspectives and management styles, but change should not alter your foundation’s core mission or drastically knock it off a positive trajectory
A Core Part of Your Governance Structure
Succession planning is not a one-and-done event—it is a strategic component that should be part of your foundation’s governance structure. Your succession plan should be reviewed annually or even quarterly, and especially when there are changes to leadership.
Creating a succession plan can, however, be a daunting task for an organization that is also focused on its core mission. Partnering with an outsourced chief investment officer (OCIO) can help. Although an OCIO does not create your succession plan, a partnership with an OCIO can be invaluable to preserve the continuity of your foundation’s investment assets during the transition period. An experienced OCIO has the knowledge, experience, and resources to create an investment policy, maintain continuity of investments, and recommend governance best practices so that the foundation can focus on its larger strategic goals.
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* Gose, B. “A Really Tough Job: Nonprofit CEOs Work to Make Their Roles More Manageable.” The Chronicles of Philanthropy (May 7, 2024). https://www.philanthropy.com.
This material is provided solely for informational and/or educational purposes, does not provide any financial, investment, tax, legal or other advice, and should not be construed as a recommendation to take any particular course of action. Information obtained from third-party sources is assumed to be reliable but may not be independently verified, and the accuracy thereof is not guaranteed. Any potential outcome discussed, including but not limited to performance, legislation or tax consequence, ultimately may not occur. The information presented is current as of the date of publication and is subject to change. Readers should contact Glenmede or consult with a financial, investment, tax, legal or other advisor if they have any questions about this material or want advice or more information.
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